we discussed. ice tailored to discussion of regulation of natural gas but i have not been part of discussion of fracking. >> this is natural gas in general and reliability because there's going to be an issue as some of these plants are unable to use coal because of the new standards being produced and there will be a time when they either shut down or move to natural-gas. that is going to affect reliability. .. discussions are occurring with the epa and other agencies so that you know that this is going to happen. and how you're going to deal with it. >> well, should there be a time when i have any reason to believe the natural gas supplies going to be interrupted i would certainly take part in those discussions. everything we are seeing -- >> this will be more about the downtime of plants, either shut down or shut down to retrofit. because you can't got a coal power fired plant and habit

still running while you're putting in a whole new system speed well, i'm that we have had discussions and i think that's one of the reasons that the epa gave us, among others, a consultative role is a plant needs more times to retrofit under the mat standard. even if you give them more time to retrofit, there will be downtime during the retrofit. so going to issues of electrical generation not existing in certain areas. >> the gentleman's time has expired. i'm very sorry to say, you're not going to be the last person to ask questions. [inaudible] >> mr. chairman? may i make an inquiry a few? i didn't get asked everything i wanted to, but i did know what had already been asked. what you asked to leave the record over a couple of weeks if we may direct questions? >> absolutely. yeah, we will have -- >> about the natural gas sector and electricity sector that no thank you mr. chairman.ir

>> we will have it open for ten days and work with you to get the questions to the commissioners. at this time i recognize the gentleman from new york for five minutes. >> thank you, mr. chairman. i won't take five minutes. i was here before and i had to run out. i just have one question. i would like to focus on the champlain express. i'm sure you are aware that i and others have spoken out in favor of closing the nuclear power plant in new york. i'm not opposed to nuclear power and i never spoke a word about closing the plan until after september 11 i learned one of the planes that hit the towers flew over the power plant which is about 10 miles out of my district. i believe and so does the governor and all of the elected officials and the surrounding area and members of congress who

have represented the area we think it presents one of the serious environmental threats facing the metropolitan region. new york is no longer needing to face the threats because the champlain hudson power would've the liver of thousand megawatts per hour to the metropolitan region and the implementation of the champlain hudson power express of the new torque electric grid would be increased and new yorkers would no longer have to live with the dangers in their own backyard. it's obviously a benefit to new york and the safety of new yorkers is all of our concern. given the great benefits of the project ipv6 important that it is implemented in a timely manner. my question is to plan for the post-indian point new york. i am sure we have to make sure

we have sufficiently reliable safe energy to replace the facility because when some of us said that it should be closed, people came back with what are you going to do to replace it so i believe the line provides a portion of that energy and i would like to hear from any of you regarding the status of the project. >> thank you mr. congressman. i delete about a year ago in the past year they issued an order in proving the market-based rates further lie in that order no one sought a rehearing of the orders of its final so we did the rates making and i believe the siding of the wine is being done in new york state so i don't think we have anything open on the line right now but we got out the order that they needed for the rate. >> congressman, i think it points to the fact that the transmission is such a good technology because it can solve a multitude of challenges going

forward. so again, i want to stay positive on the need for more transmission investment. this has regional benefits to implement in the country. >> i think to echo my colleagues comment, when we've dealt with the line as a merging transmission line i think it's a great example of the wealth and abundance of high electric facilities and possibilities coming down from canada that have a lot of the long-term needs with the emissions were no emissions but also the transmission would be key to nick that happened. a second come as you talk about the nuclear facility i'm very sensitive to the decisions of new yorkers about that plant. we are all facing a close down at the plant in california. just a heads up, replacing those

large facilities in the huge urban centers is going to require other infrastructure to replace it so we are going to need support and developers are going to need support for building the infrastructure for the generation facilities. that isn't easy to do in today's environment. >> i would conquer with my colleagues. >> thank you mr. chairman. >> i might comment on this you refer to the closing of the nuclear plant in southern california and california is a 33% renewable mandate and i was talking to one of the ceos of one of the major utilities out there and as they build new transmission lines to bring in renewable power to where they need it, they are getting in some instances specific instructions relating to some going underground on the transmission lines which raises a lot of technical issues and the ceo informed me that in the

mileage that they are going underground is costing his utility $100 million a mile. so you know, we are talking about some costly situations in some cases. at this time i would recognize the gentleman from texas for five minutes. >> thank the chair for your patience. i will take only a maximum of four hours and four minutes on my time. chairwoman lafleur, commissioner moeller and clark, welcome, happy holidays. i have one question on the tax credit and start with you in the sugar. as you know the next ten years some wind turbine orders will get tax credit hours for every hour they run. this tax credit was designed to

kickstart renewables. and yes yet, it lives on the spe way and being a major part of the grid. at least 12% in my state of texas capacity. but some markets have seen prices as low as negative $41 per megawatt hour as operators get the credit and run whether that power is needed or not. granted that is an extreme example, but they can settle a lawsuit taxpayers make them whole. that moves markets back home on the new power construction in texas that public utility commission chairwoman nelson has said and this is a quote for the market distortion is caused by the renewable energy incentives one of the primary causes this distortion makes it difficult for other generation types to

cover the cost and discourages investment in the new generati generation. and while the ptc isn't the only driver of the market distortion, it is a significant force. so starting with you, commissioner. do you agree that incentives for the renewable energy markets? >> congressman, i think all subsidies distort markets. >> chairwoman lafleur, any comment? >> in a pure market there would be no tax subsidies, but many of the resources in the market have tax subsidies of one sort or another that are not taken into account in the marketplace. >> commissioner, you are up. >> to echo the comments i agree any tax implication is going to affect and open marketplace. having said that, i am concerned

that some of the nuclear facilities that have been closing were looking at retiring because of the pricing is a concern for me because the long-term stability of those with baseload fuel and plans in the system is important. >> we need those. commissioner clark. >> i would agree for the reasons that you have identified created is a decision for congress to make. but clearly it does have a market distorting impact especially in very wind rich parts of the country and certain times of the day. >> one final question. following on my colleagues from mr. green blank question about the grid of liability passed in congress. is everyone still agree that it's bad policy to trap companies between two different regulators with different goals during the power crisis? chairwoman lafleur.

>> i think it's the policy and i supported -- you are talking about the choice though. i supported the basic principle that if the doe orders you to run you shouldn't face sanctions for that in that limited instance. >> you strongly support the concept especially with what we are hearing about in the midwest and to some extent tax -- >> commissioner norris? >> i would conquer and i've been supportive isupported in the pa. the though that you and congressman doyle have sponsored. >> thank you. i'm 41 seconds early. >> yeah, thank you very much. we appreciate that. >> well, that concludes today's hearing. i would like to ask is lafleur one additional question. recently, it was brought to my

attention that ferc has jurisdiction over lake of ozarks about tearing down some houses and then after the grand lake in oklahoma. would you be able to identify for the committee the name of the individual at ferc that would have up to date information on the authority and jurisdiction that you all have over these leaks in which hydropower is being produced? not right now, but later. >> absolutely. >> and without objection and hopefully you've all seen this, we have a letter from the american public power association, a statement that they would like to insert into the record without objection. so that's entered and we will keep the record open for ten days because as mr. hall and others said there are additional

questions we would like to submit to you all. but i want to thank you for coming up today and visiting with us and for the exchange that we had and thank all of you for what you are doing and continue to do in addressing these important issues. with that, that will conclude today's hearing. thank you. live picture here of a u.s. capitol where the house and senate are both out today. the flags are flying at half staff in remembrance of the south african president nelson mandela who passed away yesterday. reports say he will be buried at

december 14. a number of presidents and lawmakers issued presidents posted on the website, go to c-span.org. the u.s. economy added 203,000 jobs last month in the unemployment rate fell to seventh that is the lowest since november of 2008 and exceeds analysts predictions. the department releasing figures earlier today. house speaker john boehner released a number on the jobless number and said in part the report includes positive signs that should discourage the calls for more emergency government stimulus and instead with the economy needs is more progrowth solutions to get the government out of the way. begins when out at the end of the year unless congress oks the extension. yesterday the democratic steering committee held a hearing about the issue and heard from several people who face the loss of unemployment checks. here is a part of that meeting.

>> i have worked my entire adult life having had three jobs i whole career. and i've never been on employed until now. as soon as i lost my job, i immediately began my furious search for employment and began navigating the world of online board, job boards and diligently networking. my goal was to place my resume in the hands of everyone i knew. i have spent the majority of my waking hours looking for work. during this time, i was able to support myself because i received those vital unemployment insurance benefits. i not only was looking for jobs in my field, or always for jobs at the same salary level.

i am smart enough to know that most likely, i would be changing careers and taking a pay cut. i applied for everything and anything. eventually, i began applying for entry level call center jobs, jobs that would have resulted in a 30,000-dollar a year pay cut or to put this another way, a 42% reduction in my pay. that was monday of this week. in a box on the floor by my desk i have a stack of job application receipts, job descriptions, research and various forms of my resume and cover letters. this stack is 2 feet tall and i

know because i measured it. in addition, my online network connections have literally gone viral. my regular state unemployment benefit ended in early november and i immediately began receiving federal emergency unemployment compensation. i wouldn't have been able to pay my mortgage and i would have been at risk of losing my beloved little house. i was raised by my mother, a single parent. we never owned a home that we lived in apartments. so i'm especially proud of my home and i know that my deceased mother would have been proud to know that she raised me right. i am somebody.

i own a home. now in the eighth month of my job search, i am happy to say that i have secured a job just three days ago. [applause] again, that was monday. and although my job pays much less than i was making, it is a good job with a livable wage, and for that i'm very grateful. without unemployment insurance and the federal emergency benefits, i would have not been able to sustain myself in my job search. so, for me, these programs have done what they are supposed to

do. they kept me in my home. i could still buy groceries and pay my bills. my anxiety was kept to a manageable level and i was able to keep sending out applications and going on interviews. if i had not been fortunate in finding this job, i would have faced the year end cutoff of federal emergency unemployment compensation benefits absent congressional action. for millions, that would be devastating. for me, it could have meant the loss of my beloved home. i am so relieved and grateful that i won't have to face that

now. but i know millions of others are at the same risk that i was just two days ago, again, monday. i am here on their behalf pleading with congress to renew the federal emergency unemployment compensation program for 2014 and please, give the other 1.3 million americans a fighting chance to become reemployed. i am an emergency unemployment compensation success story. won't you please allow this to be america's story? thank you. [applause] the entire meeting of the house to the critics during committee on unemployment benefits can be

seen going to back as small-business owners told the house committee on wednesday it's costing time and money which has slowed down hiring. at the hearing focused on the part that requires an employer to provide health insurance if they owned multiple businesses with a total of 50 full-time employees. acting small business committee chair chris collins testifies.

>> good afternoon. i called this meeting to order. as we are all well aware of the health care law acquires businesses that employ 50 or more full-time or full-time equivalent employees to offer health insurance or pay an employer mandate penalty for tax. a critical issue is the definition of employee. but equally important is the issue of which and how many employees are attributed to the business. the answer may be simple for one business with a single owner. however when an individual shares ownership of multiple entities or when a business has multiple owners, the answer is less clear. today we will examine the process of determining whether businesses are considered a single or multiple entities under the health care law, which requires business owners to aggregate employees and could

suggest the business from the obamacare employer mandate. according to the national federation of independent business, 39% of small businesses with 20 or more employees: at least 10% of one or more other businesses. to determine if the threshold of 50 or more employees has been met in these situations the health care law utilizes the internal revenue service code, controlled growth business aggregation rules which are complex and confusing even for most experts. some experts have suggested that most small-business owners could not interpret these rules without the guidance and the related cost of a tax specialist. despite the administration promises to health care law would help small businesses, each week seems to bring entrepreneurs more bad news, more costly regulations, more uncertainty and less incentive to grow their business and

create jobs. a recent u.s. chamber of commerce international franchise association survey found 53% of small-business owners believe the law would have a negative impact on their business. in a challenging economy, many small-business owners are simply not hiring or are reducing workers hours to avoid employer mandate. thank you to this outstanding panel of witnesses have taken time to their busy schedules to be here today i now work yielded to the ranking member for her opening statements. >> small businesses are the backbone of the economy that in the past, health care costs and declining coverage have hindered small-business owners and their employees. this has hampered the nation's powers and held back small businesses. in fact, the chairman mentioned

that u.s. chamber of commerce they have conducted surveys about small businesses asking them what is the main issue that they are concerned about. they talk about the cost of health insurance to be able to provide. and in fact, 62% of small businesses in this country provide no health insurance to their employees, their families or themselves. so, if anything, this law will enable small businesses to participate in the exchange is so that we have a larger pool and in the process we will bring premium costs down because that would provide the kind of leverage that would enable them to negotiate good premiums. but the affordable care act has changed the health care landscape for small firms.

it has expanded coverage options come increased purchasing power and gives consumers control over their own health care. yet as with any law of this magnitude, some fixes will need to be made along the way. it happens every day. that is what the legislative process is all about. we passed the law, we implemented them coming and we will in any way that we understand needs to be fixed, which that is what the mechanism of the legislation is all about. that means listening to those most affected and working together to ensure small firms secure equality affordable healthcare. today we will do just that by hearing from witnesses about a complicated issue. the health care law includes an

employer mandate that requires businesses with more than 50 full-time employees to provide health insurance. the goal is to discourage employers from dropping coverage and leaving employees on their own to find insurance. with enforcement of the rules have been delayed until 2015 many small employers must begin adopting now. this hearing will focus on a particular area of the law that many may not be familiar with. the business aggregation rules. traditionally it has been to treat business as a single employee or for the purpose of retirement plans. this isn't new. we have used them and it's on the books when it comes to benefit plans. this tax rule was incorporated into

if our witnesses today will help walk us through this complicated standard and how best to educate the owners with new careful planning and proper outreach, small employers may avoid many pitfalls when complying with new obligations under the affordable care act. i think all of the witnesses for being here and i look forward to your insights. thank you very much mr. chairman. i yield back. >> the first with us today is deborah walker a certified public accountant and the national director of compensation and benefits for

cherry bekaert llp in tysons corner virginia. she advises businesses on compensation benefits and employment tax matters. welcome, and you have five minutes. >> good afternoon, chairman collins, ranking her and members of the committee. thank you for hosting this important hearing on the effect of the business aggregation rules on small business and applying the health care provisions. i'm deborah walker a cpa with 35 years experience in the employee benefits area. to determine if the employer is subject to the chair responsibility rules of the affordable care act, the business needs to determine who the employee is and that determination is made by looking at the related entities, related by the common ownership, related by attribution, and also by the services that the entity is provided to each other. to make the determination one needs to understand the detailed ownership and the services that are provided to each other. a written submission describes

the rules in excruciating detail and i can assure you that no one would apply to rules in a complex situation without looking at the regulations. the rules, as mentioned, used by the affordable care act are the same rules used for determining whether qualified retirement plan benefits are provided on a nondiscriminatory basis to the fair cross-section of employees. those rules for the retirement plans are voluntary, not mandatory. in addition, because we are looking at the tests, bright line tests offered the opportunity as evidence by the qualified plan rules in other words for people to avoid the rules. in addition because the test often happens the application doesn't make as much sense as that otherwise may. in the healthcare context where we are looking at whether we have 50 employees or not, it is

a computed text for the few taxpayers that are nearing the 50 employee limit. one can expect that those employees nearing the 50 employee limit what in fact consider the increased healthcare costs and deciding whether to hire additional workers. it will lead to inefficient and unwarranted economic behavior. many small employers as mentioned also a retirement plan of the four o. one k. safe harbor plan and they don't even need to apply these rules because they are not subject to the discrimination test due to the safe harbor. the small businesses could not do this without advice and many of the advisors for small business are not familiar with the rules. so therefore i offer an alternative suggestion any suggestion that would be effective circumstances test. it would look to the individual that hires and fires and make purchasing decisions that set the prices who operates the business on a day-to-day basis.

and in that case, we don't have to worry about who is a passive investor and aggregate of those entities. by focusing on the control of the day-to-day operations, the employee or would be defined by the industry in which that an employer and individual operates and it wouldn't affect the competitive position of the business. the opportunity to avoid a bright line test for the planning wouldn't be available, and the unwanted effect of the bright line test wouldn't exist. now the second circumstances isn't new we have in the tax law for years to 30, 40 years and determining whether some it is an employee. they try in the 80s to have certainty determining whether somebody is an employee or independent contractor and it was determined that there were too many situations between the

service providers and recipients and it was too hard to draw hard and fast bright line rule and a bright line rule would be circumvented. it's not a specific way to any factor. in fact the weight of the factors change depending on the industry and any advisor and the irs review the 20 factors and review the particular situation and makes a judgment call. there's another place that we talk about the separate lines of business. this is also in the plan area of the business is a portion of an employee are identified by property and services that are provided to a customer. so, the regulations defined what is a separate line of business. it has to be organized

individually and there can be no more than moderate overlap between employees and management. a rule such as that, more o effective circumstances test may be more appropriate. of course as i mentioned the determination is always subject to audits by the irs the rules could require him notice requirement as they do for the separate line of business or employee independent contractors and the businesses for the irs to make a determination. it's overly complex but only a limited number of tax professionals and a small business camp to provide them with health is a small subset of professionals tha the deal with these rules and these are only going to apply for the businesses for a few years for

the life cycle and close to the 50 employee test. bigger based on who control the day-to-day businesses and it's a much more logical tool the statute or the committee report could lift characteristics of the management and taxpayers would be able to make a judgment as to whether they are to constitute the employer for these rules. >> tradindrinking member velasq. >> it is my pleasure to introduce ms. bogardus come an attorney serving as to the compliance office for the international insurance services. in this position, she provides compliance and consulting services regarding health plans and other employee benefits. ms. bogardus was previously chosen as one of the 100 men and

women in insurance by business insurance and was selected as one of the 25 most influential business women by the business journal. welcome and thank you for being here. >> thank you, chairman collins and ranking member velasquez. i am honored and very happy to be here to be able to get some comments and the testimony on this very important issue. i want to have an e-echo for whaecho for whatis walker said e possible compromises or concessions towards small businesses. i think a controlled test would be a great first step as opposed to a bright line standard. i want everyone to keep in mind as we go through these types of discussions that the importance of the 50 employee rule and of a control group which would cause small businesses to be treated

as one employee or has impact not just on the basic issue of whether the employer will be subject to the law as a whole. it has huge implications for the practical compliance under the rule. i want to address specifically today. on the awareness and finally confusion. the issue of complexity as you read through the rules. these are very complex rules. the result of the corporate planner to incest and an employer in determining whether they have a control group. as to the awareness of the level of the awareness is low. if they voluntarily decided to create a retirement plan come anyes, they've generally addresd these issues but for the employers that are made up of very small groups are they likely not done this as they've

put in place a retirement plan and while it's true that insurance carriers asked questions about the employer side not so much to do an analysis it is not an analysis. they are asking about sites they can put into their programs and how it should be applied and whether medicare secondary rules apply and other technical issues like that. so they can determine whether they will issue small group or large group policy. for example, just this week i received an e-mail regarding an employer in california and they were unable to get a small employer policy they were largely -- part of a larger group. the insurance carrier and covered is that he wouldn't issue the because they would be discriminatory they had a small employer in arizona and they

were able to get the policy and very low-paid employees they are now put into a very expensive epl and they can't afford it, $1300 a month. so we have seen quite a bit of a low awareness around this issue even among not just small employers that large employers. they say many times i wasn't aware of this and we do get comments that are very incredulous that this would even be the case. in terms of some of the additional confusion, there are myths around the association plans and unless you have stickiness in a group that is difficult to put on unrelated or even barely closely related employees together, some insurance carriers will not write about even though they technically would be a control group for the. as the keep that in mind part of the problem is the practical access to the insurance coverage, which the law

unfortunately doesn't guarantee the small employers. other planning opportunities come yes. do we see smaller employers try to use those to avoid compliance with the law, not yet. and part of a lack of awareness is a reaction to the delays that have occurred. a belief that there ha have been the ways that those will continue. for smaller businesses, there is a sentiment that the rules for the large employers were delayed, which they were until 2015. however for the smaller businesses, they've already felt many of them the brunt of the very expensive renewals this year. of the claims that were offered to the renewal option to renew their policies this december and to delay the cost impact of the health reform and variably they've taken that offer if the carrier has extended it. so it's basically kicked to the issue down the road for another year or so to speak we will hear

more about that next fall the additional policy cancellation of increases. we are seeing increases of 100% for the smaller employers. it's a matter of the law providing access. it's not jus justify any means affordable. the small business is also different. if they are part of a control group that doesn't mean that there's not actual control or authority or even cooperation among the various odors. there is no essential hr person and they handle the function of various locations and commonly there are situations where the employers simply don't have a common point person. but by creating the common systems to determine whether the employee or his 50 employees or more and then also consistency across the group for the payroll

purposes is very difficult. i want to also touch quickly on the participation requirements that insurance carriers have been a small group market place. the rules under the federal law to allow participation requirement of 70%. the insurance carrier can require that a percentage of the employees to elect the coverage and alternatively they require the employer to pay a significant percentage of the premium for employee only sometimes 100% of the cost to the concept is that they are only going to pay for the coverage based on the 9.5% rule iis not the case, not for small employers and not for large employers. the employers are paying significantly more especially because of the fact that they cannot know how the income distribution rules which are yesterdayetto be issued are a cg concern. just for information to senior counsel for the treasury department indicated to me that they cannot enforce those rules.

check it off their list and they are done with the issue. it would be difficult to do so for the small and short plans and very difficult for the employer to be able to coordinate. a positive friend industries and different states quite commonly. automatic enrollment a be anothr serious issue whenever that rule doesn't take effect and finally issues commonly held, commonly controlled groups for federal tax purposes may not be sufficiently related for either kerry or purposes or issue the policy or the state may consider those groups to be an illegal under state law even though it's not being formed as a self-funded plan to do anything to avoid the state rules and it would require the insurance carrier for those groups that they would try to sell funds and then also the capitalization as a carrier and regulation as a

carrier so very onerous. just in the summary there are many issues that are affecting the smaller employers awareness, complexity of the rules certainly but i think the issues around confusion and fear of the smaller employers is what impact they will feel from the law and what they would do now with the uncertainty on that regulation. >> our next witness is ellis winstanley the officer of trade logic corporation of austin texas. with several family members, mr. winstanley owns a number as mrs. including restaurants, a catering company, software company and a promotional product company. welcome. >> chairman collins, ranking member velazquez, the committee on small business thank you for the opportunity to testify on the fact the effect included in the healthcare law on small businesses like ours.

my name is ellis winstanley and i'm the ceo of tradelogic corporation. i am a member of businesses in texas with my twin brother, parents. i'm honored to share the perspective of the company and the restaurant on behalf of the national restaurant association. i'm a business executive with a track record of starting up into turning ouindeterminate for grog businesses in the hospitality. my brother and i were entrepreneurs who got started in business while we were students at the university of texas and we were known for rescuing the local restaurant brands and turning them around as a contributor and job creators. currently we own eight restaurants for the partners which i oversee day-to-day on a day-to-day basis and we were partnered with our parents in the construction and planning promotional products and small businesses one of which is trade logic corporation and serves as the management company that

provides challenges for all of the small businesses but particularly for the restaurant and food service operation due to the unique characteristics of the workforce. it's difficult for many restaurants especially small businesses to determine how what the law impacts and what we must do and why. the employer aggregation will present a significant complication to the business. it may seem like a simple thing to do for degradation rules and the structure of many restaurant companies determining the employer is more complicated than many of them may expect. like many cities around the country has a rapidly developing community and we like most of the operators anticipate in the local restaurant entities of various partners often family members. though we consider each operation to be a small-business many are discovering for the purpose of the healthcare law must be considered one of the playeemployerto the aggregation. the application of these

aggregation rules is already having an impact on the small businesses consuming valuable time and resources to decipher. each of less than 50 full-time equivalent employees. two are highly seasonal businesses and may not be considered for the calendar month and uncontrollable factors such as whether or not the legislature is in session and the performance of the sports and academic calendars related to the surrounding universities. based on my understanding of the aggregation rules would be considered as one employer under the law but is an applicable large employer. it would operate on the thin margins to manage the labor cost very closely to remain viable. austin texas remains one of the strongest economies in the country but since the recession we have a regularly tight and built to manage the rising costs

and we are very much still feeling the impact including double-digit health insurance premium increases. in the end or customers i see the cost associated with the way the healthcare law has implemented significantly to the pressure. there were several other sections of the law but were impact restaurant operation and similar small businesses while the increasing cost remains a major concern that this law will impose on the businesses and the restaurant food service industry attracts people seeking a flexible work environment whether the students between careers are just looking for a second job to make ends meet there is significant movement in and out of the industry and between employers. given the short-term nature of individual employment, the administrative burden of educating and processing enrollments can prove almost as

expensive as the coverage itself. restaurants cannot absorb this cost and ultimately the cost would be borne by the public as a whole. the implementation also threatens the safe haven of the flexible work environment for those who depend on it. thank you again for the opportunity to testify before you begin today before the healthcare law and its effect on the vigorous business aggregation rules on small businesses like ours. i'm proud for the responsible because of my community in texas creating jobs boosting the economy and serving the customers and we are committed to working with congress to find solutions that foster growth and benefit the communities. >> thank you mr. winstanley. ms. donna bekaert is an accountant and adrian michigan and holds an mba from michigan state university from siena heights university. welcome. thank you chairman collins and

members of the committee. it is an honor to testify. i am donna bekaert. i've been a cpa for 25 years, and i found my own accounting firm for the last 13 years. i live and practice in michigan in a small rural area. on top of owning my own firm i also own a small payroll company. i have invested in a retail store, and my husband who is also here with me today is a partner in the family dairy farm. as you've already heard, the rules require any group of buddies under the common control as a single employer, the primary key in determining which companies should be combined as either correct or attributed ownership or affiliated service but not operational control. these rules may cause unrelated businesses held by family

members or trusts to be aggregated. companies within the control group do not need to have the same management or even be in the same industry. also, the business aggregation rules are very complicated as you've heard and are rarely applicable to small businesses, therefore they are unfamiliar to both small businesses and small business advisors. i have had many webinars and training and of the group supplied not cover the specific of the rules and unfortunately i think many business advisors to that deal with just primarily small businesses assume that cultural groups mean hand on hand control instead of the actual emphasis of the director attributed ownership. i have two examples of applying these control groups to businesses. one is my own personal business.

like i said i owed 100% of the very small cpa firm that i also manage along with the payroll company that i managed, and i have invested in the retail store. however, that is an investment i do not manage that or operate that on a day-to-day basis. and then of course, my husband's farm. he's a partner with his brother in a dairy farm. i have no management responsibilities. i do not make decisions for the company but my name is on some of the land and i do provide some bookkeeping services. so based on the business aggregation rules we would have to combine all four of those entities and we are not quite close to 50 employees yet, but close and the payroll company is quickly growing. my second example is one of my clients, an elderly woman that owns 100% of the local restaurants and her son manages and controls all of the business

decisions in those restaurants. she recently provided the capital for her nephew to open a restaurant in florida in which the restaurant, the nephew manages and if they all of the business decisions for that restaurant. under the current business aggregation rule those entities would be combined, and they would exceed 50 full-time equivalent and require them to provide the minimum essential health insurance benefits. so those two examples illustrate how the control group rules will aggregate businesses that are not directly owned by the same person. they do not have the same management, they are not in the same industry and may not even be in the same state. therefore the implications of requiring small businesses to use these aggregation rules could create several negative effects and hinder growth and discourage owners from hiring new employees. it can create that environment t where the owners try to

manipulate their ownership percentages or minimize their employees and keep them within the 30 hours. it could discourage small-business owners from investing in other businesses and it could require them to provide health insurance benefits in industries where it's not typically the norm and the additional cost could create difficult for them to compete in those industries. last, i would like to mention the increased cost of my own plan. i do provide basic open transfer my people in my accounting firm and payroll company. this policy has been canceled and the closest policy i've been quoted a 40 to 44% increase that would have reduced benefits. it would have higher copayments and hire back some on out-of-pocket expenses. so these increased costs would be very difficult to absorb. thank you. >> thank you very much ms. baker. in a questioning period i guess

i would like to start by just stating the obvious. hearings like this that we are having today gives us all an opportunity to obtain testimony on the record that will highlight the consequences, intended and unintended of the various flaws in the regulation and it's very helpful that ms. velasquez as we said as we look down the road of potential changes that we need to come and again come in to state the obvious, we all need and want more jobs and the economy. the economy is kind of languishing today and more jobs is what everything is about getting the unemployment down and increasing payroll across the country to drive the economy. i would join you in supporting the legislation passing the jobs bill that we have for so long. what we need is to pass legislation to create jobs and we are just waiting for the leadership to do so.

>> i can appreciate that it is jobs. we may disagree on what stimulates jobs. ideal even lower taxes, less regulation, less government interference and certainly we will have some other questions today to indicate to the impact of the aca. what i've heard today about, and i'm a small business guy. we have the mantra grow or die and if you don't, you aren't doing what you should as a notch up in orbit growth requires capital. accounts receivable, inventory, etc. any and all dollars wasted on the regulatory burden such as the business aggregation rules and hiring a tax expert is in fact the dollar that is not available to invest and grow. so i get gas briefly we have a lot of members to ask questions, but just to reaffirm, i think i heard it in your testimony, but we would like to go down the line starting with ms. walker and ask you di to get into the business aggregation rule is as

it is currently written would have a negative impact on jobs and the economy hindering job creation and economic growth and therefore should be altered? >> i think anytime you have a bright line test, it is going to hinder people that don't go across the bright line test and that in this case is going to hinder the hiring, expansion and the grow or die. they are just going to choose to stop growth and head over to other forms of business, other ownership. so yes. >> thank you. ms. bogardus. >> of the provisions definitely do hinder job growth and the hinder strong job growth and by that, i mean that the jobs that could be created in the future

would instead be part-time jobs. that is of course advisors on the topic have their own bag of tricks and it is definitely possible to stay outside of compliance with respect to each individual employee if you can keep that individual in a per time position. full-time jobs are absolutely necessary. you cannot serve two masters. it's hard to have the word nation just on the part of the employee much less between the two separate employers. so strong job growth is necessary. and of course there are other issues involved as well. but i agree the funds that are spent to analyze the issue and then also to comply are extremely high and it's not just the initial cost. it's the participation every single year in the premium payment. >> thank you. mr. winstanley? >> i think that's what w that we seeing now is less people have insurance band have had

insurance. the reverse affect of what we are hoping to achieve here. and i think that also in the restaurant industry specifically you hear talk about people getting 30 hours a week and that being the reaction try it around tharoundthe country and that is extremely negative for the industry. i think that's negative for the employee and long-term while some groups feel that is their only option i think in the long run that is not healthy for our economy. >> thank you. ms. baker? >> yes i do. as in my testimony, i think there's a lot of concerns with that. .. those that have the true entrepreneurial spirit to be discouraged from investing in more small businesses and expanding in other areas. that would definitely hinder. >> one more quick question and then i'll yield to ms.

velasquez. kind of a yes-no. we're focused today on the complex business aggregation rules, but we're focused on other issues, and mr. winstanley has talked about employees getting cut their hours to get them under the 30-hour rule. as we look and try to message some changes that could be made, i would first like to ask each of you if you think, in your opinion, the 30-hour definition of full-time should be increased back to 40 hours. miss walker? >> yes, it will prevent workers from ratcheting down the hours and leave them at 40. >> yes, absolutely. >> very succinct. we talked a lot about the 50. there are a lot of companies in that 40-plus, going to 50,

wanting to go to 75, and under obama care, this arbitrary selection of 50 now defining a large corporation doesn't fit with the entrepreneurial spirit. so in the same, you know, what do you think, yes or no, do you think we should increase beyond 50 the number of ftes that would trigger the affordable care act? i don't know if it's 100 or 150, but do you believe that 50 is too low and stifles job creation, and, therefore, we as congress should increase it to a number higher than 50? >> i think the bright line test of a certain number of people is the wrong test. you need a facts and circumstances test on who has day-to-day control. if you increase it to 50, the same thing that happens beyond -- that happens at 50 will happen beyond 50, whether there's 75, 100, 150 or 500. >> ms. bogardos?

>> as for the 50-employee rule, i agree increasing it would alleviate a number of issues, but there would have to be a change to the statute itself. >> mr. winstanley? >> i think the challenge comes in that every industry can't be put in the same box. i think in the evaluation of, really, any organization that tries to encapsulate mobile industries, there are different criteria for different industries. i think looking at an industry with a somewhat mobile work force or, by general definition, a short-term work force, i think the costs are going to be significantly higher for the same number of employees, same number of ftes than it would be with a longer term work force. yes, i think it should be higher, but i don't think it can be the same number for every industry. >> thank you. ms. baker? >> yes, i think that would definitely help, but then i

support what has previously been said. a facts and circumstance would make a whole lot more sense when it comes to defining control. and when you do have something that crosses different industries, that is adding additional complications. >> thank you, all. i'll yield to ranking member velasquez. >> thank you, mr. chairman. i just would like to call the attention for members of the committee to the hearing we conducted here in this committee on october 9, the effect of the law and definition of full-time employee and small businesses. one of the expert witnesses was dean baker, the executive director for the center for economic and policy research who conducted analyzed data right after we passed the affordable care act. and where small businesses were expecting the employee mandate to go into effect. and since then, he didn't find

any data that showed that small businesses were not hiring employees or increasing the 30 hours because of this. when the affordable care act was in effect and when people were expecting the employer mandate to go into effect. so they figured out reserve from san francisco conducted -- the federal reserve from san francisco conducted another research and it has not had any effect. but like any law, we will continue to monitor and make the fixes that are necessary. my question to the panel of witnesses, the business aggregation rules are meant to prevent skirting the law. in your opinion, what is the correct balance between preventing abuses and protecting closely held businesses from potential penalties?

miss walker. >> i think any time that you have a bright line test, you're going to end up with abuses, because people walk right up to that bright line and not cross it. so what you have to do is come back and put it into a facts and circumstances test where you apply judgment, i apply judgment, the irs applies judgment, and we have each person decide, based on the facts and circumstances in that situation, whether there should be an aggregation, whether it truly operates as an employer. >> so do you concede that a number of corporations should cooperate on a facts and circumstances test? >> yes. >> i agree with miss walker that the facts and circumstances test is a much better standard.

again, requiring legislative change. >> and that would create more jobs? >> i think it would, and i think also serious consideration should be given to changing the threshold from 50 to perhaps 250 and look at it on an industry basis instead, or perhaps blend the two. there are some precedents for using 250, such as the w-2 payroll reporting rule. >> sure, i think when you look at the original context that the control provisions put together for the irs, it was put out there to stimulate the use of corporations and companies growing. i think the way it's being implemented now is having the alternate effect. i think what businesses need is clarity around what the rules are and they need some rules that they can reasonably work

with based on the industry they're in. then i think that job growth will ensue. >> miss baker, i just want to ask you another question. when it comes to contracting programs in the federal government, or maybe ms. bogardos, you might be willing to answer this question, a business must meet not only ownership by holding a majority of shares but also demonstrate control over a business operation, and you described that in your testimony. yet for purposes of the aca and business aggregation rules, only the common issue is considered. which standard, in your opinion, is a better indicator. miss baker? >> i'm not sure i really got that, but to me it would be control over the entity, the day-to-day operations, the

decision making. not just investment or -- you know. so the day-to-day operations which supports the facts and circumstance that they've been discussing here. >> ms. bogardos? >> i would agree, actual control in the facts and circumstances of the day-to-day operation, which is absolutely necessary for compliance. as i said before, the small businesses don't have centralized systems, payroll, hr. >> thank you. i wou . >> thank you. at this point i would like to yield five minutes to representative tipton. >> thank you, mr. chairman. i think i'd like to start out with mr. winstanley. when you're talking about the variety of businesses you have, do you file separate tax returns? >> yes, they all file separate tax returns. >> are you allowed, if you have

a loss on your logic tech business, your small business versus your restaurant, can you write off loss to your restaurant? >> no. >> what happened to business loss aggregation. >> there is an administrative burden that goes to running multiple entities. >> so what we're seeing is the administration being able to force you to be able to buy that health care. has that impacted your ability to be able to create jobs? >> yes. >> you're living in the real world. we just heard comment that there is no data -- i'll quote that again -- that there is no data that small businesses are not hiring as a result of the implementation of the president's affordable health care act, no effect on job hiring. is that your experience? >> experience? >> no, it's not. >> anyone else care to comment? >> no, it's not. i see it in small businesses and large businesses. >> so businesses aren't hiring

because of the affordable care act? >> i believe it's draining resources from the companies that would otherwise be going to use to grow the businesses. >> very interesting. because we are dealing with theoretical data. we're dealing with real life experience. i appreciate that testimony. i do -- i come from rural colorado. i'm a small business guy. do you have any experience, and perhaps the cpas on the panel can address this the best, are you seeing insurance cost differences between businesses in rural areas versus urban areas? and what i can speak to is, in the state of colorado, if you punch in a rural zip code for your health care insurance, you are paying a 65% premium compared to people that are living in urban colorado. are you seeing those same sorts of circumstances? >> i'm sorry. i'm going to have to pass that to the insurance person.

>> i can address that. that is happening. and it does happen. because there's less competition. there are fewer facilities in the rural areas. and they can charge what they want to charge because that's the only hospital, the only emergency room in some cases. >> since you have a little bit of experience with this, is it a little more typical in these rural areas to see a lower income than we do in urban america? >> yes, sir. >> it is. you know, we hear a lot of talk here in washington, coming out of this administration, about income inequality. but i'm just hearing testimony that the administration, through its policies, are forcing you to cut the incomes of people by reducing their hours. we're hearing that the people that live now in rural america who earn less are going to be paying more for what is now law that you must obey and buy insurance. is that correct?

>> the simple answer is yes. >> the simple answer is yes. so effectively what we're seeing is a system that is not affordable, and we can certainly get into the accessibility issues as well. but going back to the aggregation rules, we're specifically trying to be able to address on this, can anyone on the panel give me -- a small business guy, i yjust want to b able to produce my product to be able to sell, to be able to provide for my family. can you give me two sentences to be able to define the aggregation rule. >> a parent subsidiary group where you own 80%. a brother/sister -- in conjunction, 80%. and then the affiliated service group rules. those rules don't necessarily have ownership. if i provide management services to another business, that will be aggregated.

>> as a small business guy, that's about as clear as mud to be able to understand that. how much -- we've had abundant testimony on this committee. the rules and regulations -- and this is another one that we're talking about today, are killing jobs in america. killing job hiring prospects in america today when we need to be able to hire people. how much more is this going to cost small businesses like mr. winstanley's working on a narrow profit margin just to be able to comply with another government mandate? any idea? >> any time you look at these rules in a situation as complicated as his with different ownership, you're going to have to sit down a chart. when he transfers ownership to children, to other people, you're going to have to go through the chart. you're going to have to ask him who does the management for his different businesses. does the software company, in fact, do some payroll for the restaurants, those types of questions. and then you're going to put it

all together. once you reach 50 people, you'll have to know -- he'll have to comply with the rules, and then he knows which companies in that pot he has to provide minimum essential coverage to the workers for. >> a lot of money. thank you, mr. chairman. i yield back. >> thank you. at this point i'd like to yield five minutes to representative ming. >> thank you, mr. chair. thank you, ranking member velasquez. i had a question. i think it was mr. winstanley who testified that you believe fewer people have health insurance now. >> i believe fewer people are accepting health insurance now that is available to them. >> i'm just curious. i know there are a lot of good employers out there, like you, ms. baker, who have always provided health insurance to your employees. i represent a district in queens, new york city, where a lot of employers have not always done the right thing like you,

ms. baker, and have not provided health insurance to their employees and have taken advantage of many employees around the country who don't speak english and are not familiar with rules. statistics have shown that on sunday and monday alone, 29,000 people signed up for the new health care law just on the website in two days. and i was just wondering, you know, what advice could you have given or would you give to a lot of these employees or small business employers who have not provided insurance in the past? anyone can answer that. >> sure. i mean, so we like to consider ourself a good employer. and we have provided insurance in the past. the nature of it is that the cost of insurance has risen drastically in the last few years. and most of the young people who are healthy simply drop off the plan. which makes the cost go up even more. so we've got a situation where

people aren't willing to pay for the insurance despite the fact that we're continuing to increase our contribution. and it's become a situation where i've got to believe -- i only know from my own experiences what we're dealing with. but i've got to believe there's a lot of other small businesses around the country that have experienced the exact same thing. i think if you multiply all those, the net loss is significant. >> would the gentle lady yield? i just would like to relate the fact that in massachusetts, when they passed the law and implemented it, the target of the young people were not signing on. and then later on they did enroll into the health affordable care act. so we believe that type of trend that we saw in massachusetts will be seen throughout the country. >> can i answer yours? okay. you know, so for my own personal situation, i'm in one of the

rural areas with very high health insurance. and low -- lower income. our county has about 99,000 as a population with an average household income of middle 40,000s. as i struggle to provide more health insurance and they aggregate the businesses to make it -- you know, if i can stay under that 50, i will. it will be extremely expensive for me. in the meantime, to absorb a 40% to 44% health insurance increase, it would be much easier for me to put my employees out on the exchange. it's a lot cheaper for them to provide that than for me to absorb that additional cost within my small profit margins anyway. so thank you. >> i would just comment that if the additional cost of adding each employee would be approximately $4,000 to provide insurance to that individual at an affordable rate, it may be a

smaller figure in some places, higher in others, that does stunt the job growth. i will say that the law itself is having an impact on -- on the cost. and we are seeing people not enroll in the coverage that maybe in the past they would have enrolled in because the costs are just higher. and we do see and traditionally have seen young individuals not enroll in the coverage even if it costs them $20 a pay period. and it's a matter of individual choice. they are looking at the coverage and they are saying i would rather have the money. in the bigger picture in the context of wages, if people would rather have the money, the affordable care act takes that off the table if they have to be offered the insurance. >> thank you. we'd like to yield five minutes

to representative leuthemeyer. >> one of the things i think we're seeing and you discussed today is the problem with companies trying to deal with this. i know there was an economist in the committee here recently. and they had done a small business survey. and 76% of the businesses that were surveyed said they were not going to hire in the next six months. ms. walker, you have mentioned in your testimony here something like not hiring workers or eliminating working hours. have you seen this already with your practice, that businesses are starting to limit their hours? can you give me an idea of the number of businesses you're talking about? >> what i've seen is that businesses tend to hire new workers at less than 30 hours. so when we have to expand, we're going to expand on a part-time basis. >> okay. >> one of the other things i saw in a statistic yesterday for a

slide presentation, if you go back two years, there were six full-time workers hired for every one part-time worker. that has flipped now in such that it's one full-time worker hired for every four part-time workers. those are dol statistics. >> thank you for that. ms. bogardous, in your comments a while ago, if i got this right, correct me if i'm wrong here, you made the comment that your company doesn't write some groups because they may not be a related business. in other words, you're not sure if they would fall under this rule or not, so as a result you back away from doing that? did i understand that correctly? >> actually, we're an insurance consults and brokerage firm. we see the insurance carriers doing that and refusing to write certain groups some of it may be the confusion among the carriers. they're still exercising their

leeway when they can refuse to write a policy. >> even though they may technically, if they did the research and dotted their is and crossed their ts to qualify, just the unintended consequence, just the concern about they may be in noncompliance is enough to back them away from that. is that what you're saying? >> that's correct. it may be a smaller -- a smaller entity, a smaller subsidiary in one state without the headquarters location. and so it could not be the location or situs for the insurance contract as a whole and they back away from it. >> you work with this every day. are all the rules promulgated now on the president's health care law? >> no, sir, they are not. >> how many do we have to go yet? >> the rules -- the rules we have currently on the very important issues of -- of play or pay, the employer mandate, were issued in early january last year. we have a lack of final guidance, a lack of guidance on

very industry and employee specific issues. there are impacts and unintended consequences of the rules that have already been issued that need to be fixed and resolved. and we do not know basic information such as whether we will get transition relief for particular situations such as counting the employees for purposes of 2015. we're less than a month away from the calendar year that is most at issue, 2014 starting january 1st. and an employer needs to know. so we're lacking guidance. we're kind of operating in an area of, this is what we know today. which is the case. >> how can you help that company plan with the uncertainty that just sort of hangs over them with regards to the rules aren't promulgated yet as well as we don't know the unintended consequences of what may or may not happen here? >> we like to address that with a three to five-year strategy.

we always have a plan "b." if they change the rules in this manner, then we'll go this direction. but we advise -- we do have some small business clients, but we advise many, many large employers. and i know that not every small employer has access to advisers with the level of sophistication that we would bring. >> mr. winstanley, thank you for being here today. it's always great to have someone who deals with this on a daily basis. ms. baker, you as well. because you give us the real life experience of how the consequences and unintended consequences of stuff that goes on here in washington affects real people in the real world. how much time and how much money do you spend on compliance with this health care law? mr. winstanley? >> it has been a very significant distraction from our business over the last couple years. especially as we try to ascertain where it's going to go, where things are going to land. our administrative -- some of the folks that help with our

administrative stuff, they've spent a lot of time, i've spent a lot of time on it. some of my -- it takes a lot of our energy. >> ms. baker? >> i've been flooded with questions and phone calls over the last year with my clients. just, you know, there's just a lot of confusion, wondering if, you know, they have to start providing the health insurance. when would it be mandated, what do they have to do. i guess i've not tracked the time specifically, but it has definitely been a burden on my practice to try to answer all the questions that are out there. >> and the cost and all those hours are born by your business and therefore that's not making you any money. >> absolutely. >> thank you very much for your testimony. >> we do have time for another question or two. at this point i'll yield five minutes to representative hahn. >> thank you, mr. chairman. ranking member velazquez for holding this hearing. you know, it would be nice to hold these hearings with the

thought that if we did hear some unintended consequences that impact our small business, that we had the belief that our friends on the other side would actually like to work on fixing some of these problems. i get frustrated in these hearings because i know the main purpose is just to have more bad stuff to talk about and to attack the affordable care act. i -- i would love for this committee to actually work on some fixes. and i think we even heard some some offers of compromises that might make it better. but i'll tell you, you know, that's not going to happen. we don't have partners on the other side that actually want to look at this law, how it does impact your businesses we, and e any time or effort to fix it. we're more than willing to work with our friends on the other side to fix things that do have

unintended consequences. being members of the small business community, we love our small businesses. we're for our small businesses. this is one of the committees that i enjoy when i go back home to my district in los angeles, is is talking to my small businesses and finding out what we can do here to help them out. so it's frustrating to know that there's no intention on the other side, all the testimony you give, nobody is willing to work with us to try to fix this law. having said that, you know, i'll ask that to ms. bogardus. so, these business aggregation rules already apply to many aspects of business law like arissa and cobra. so i know some of these small businesses founded a su eit a s possibly, that it also included their compliance as it related to the affordable care act. so maybe you can explain to us why it came as a surprise when

these aggregation rules already existed and small businesses were in compliance in other areas. and maybe there are some small businesses that are having to come in contact or in compliance with these aggregation laws for the first time. and maybe -- let us know why it was a surprise. maybe, too, what kinds of small businesses are experiencing this for the first time? what kinds of businesses that maybe never had to comply with this law before? even in other areas. >> yes. representative hahn, thank you. the answer to that is that while these rules have been in effect for quite some time, they affect arissa, cobra, medicare, secondary, a number of technical issues including retirement plans. if a business has not offered a retirement plan and has not offered a health plan, then the

analysis simply has not been done. e even if the small businesses offered a health plan, again, there's not been the analysis. the insurance carrier says how many employees do you have. the small business employer answers for the group that he's covering. nobody has the ability, time or authority to sit down from the insurance carrier and work with that employer to determine its size in particular over the entire control group. that's just simply not todone. the carrier has no obligation nor consideration for whether the rest of the control group is addressed or not. so it does come as quite a surprise. >> i think the difference is that the mandate -- this is a mandate, whereas where it's providing health insurance, i can provide health insurance to just some of my workers and not others. so it's all been voluntary before. >> what criteria will you use to decide which workers will get

health insurance? >> it's often driven by the industry. >> okay. >> different industries have different types of retirement plan, different types of health benefits. >> but when people say more companies will be dropping their plans, their health care plans, i just -- i don't know what facts or impeerical data or research will drive anyone to conclude that, in fact, people -- companies will drop health insurance. because when we hold hearings here, one of the biggest issues that companies and small business bring to us is to find skilled workers. and i'm sure that in order to retain those skilled workers, if you provide health care as one of the package job offer, that

>> before i yield back, no bounce of my time, i just want to throw out one more statistic today. the adp national employment report which measures private employment says small businesses led the way in job creation with 102000 jobs this november. thank you. >> there's never enough jobs. so i'd like more jobs. spent let's pass the legislati legislation. >> we will get it down to the wire. >> having just looked at those implement statistics, considering we need to be around 300,000, 350,000 creation every month we are still devastated, upside down. >> would the gentleman yield? >> no. >> just because were up against the clock. i'm sure the chairman will hand you sometime when we are done. isn't ms. bogardus? emmett even close?

just because i've heard some of the discussion can get explained it twice. i don't want ask you to do it again the third time, on the aggregation rules, how different these aggregation rules are in regards to what you sing in the new health care law compared to what we have done in the past and pension and tax and mechanics. can you sort of the blame some mechanics and how they're different? >> i may yield part of this question to ms. walker asses on the technical issues. mechanics are different simple because employers have not done this in the past unless they've offered a retirement plan at a mini cases if they are operating under safe harbor them in debt of done all the analysis or they been able to pull out certain business classification units. in terms of what we are seeing an actual real-life, i know there's been discussion of jobs creation and whether employers are hiring or not hiring.

i would caution you on the statistics that you here and answers to service. because i know that many of our clients will not answer that question because they have seen the fallout in the industry, whether it's restaurants or other industries, from answering and addressing questions like that. so i don't believe that you get a complete picture. >> into one day that might be a completely different because we had that happen once in arizona where some voluntary service or filled out, waking up and being audited the next day. ms. baker, now with your background and the cpa world, i could always turn back to our lawyer friend, let's deal with the reality of businesses trying to survive. we had a hearing yesterday at what many of the small banks are having to do to survive. have you started to have clients with smart lawyers coming to you

saying, how do we have to now game the system qwikster we have to put this in a trust? to we have tried this, i that? you don't have to do anyone under the bus but have those conversations begun? >> i think most of the businesses that deal with, it's the first question they ask me is what do i do to avoid this. >> in many ways, one more time as our regulatory command and control society grows out of washington, we're going to turn a lot of our friends out there's businesses into trying to find a way to game the law. you know, in many ways just to survive. >> i advised them not to, but that is the first reaction is what do i have to do to avoid this. >> mr. winstanley, you have -- from your testimony, some of what you wrote, you've actually reached out and invested some of your capital to start other businesses.

and yet, that maybe now pulling into the business aggregation. does this become sort of a chilling effect upon you helping capitalizing new economic growth around you, and have you actually been approached on how to game the system? >> it's one more variable to take into account. every time we do something, and -- about game the system, there's always -- how do you figure -- were to be stand on this? how are we set up so it's up to both or not applicable to one, we have to figured out which has taken considerable resources. we think we understand it but, you know, i think the issue is in the distraction from the business. >> mr. chairman, just because were down to that about three enough minutes, we heard a lot of this in yesterday's hearing,

where how do these small banks help economic growth, create jobs, take care of a lot of our brothers and sisters out there. and the arrogance that we as policymakers keep dumping on to our country and our job creators. at some point we've got to wake up and decide, this isn't partisan. it actually should be about the people we represent and not the vanity here of trying to justify things we've done that don't work. mr. chairman, without i yield back. >> thank you. at this point in time we do have those as you can see. so we will adjourn for i would say give or take 30 minutes. and after which we will reconvene. so for right now we will be adjourned. [inaudible conversations] >> the committee will reconvene. i would next -- okay.

thank you very much, mr. chairman. ms. walker, and thank you all the by the way for coming in today am testifying. ms. walker, in your practice you at by small employers, correct? >> yes spent have you found that there's situations present difficulties on the roles overlapping shareholders, would you discuss some of these situations? >> ms. walker, right. >> i think one of the best examples is the one and only used -- donahue's. that was an elderly woman who had invested into restaurants. she invested in a restaurant for her son in one state and a restaurant for her nephew in another state. and that required aggregation

rules. the other situation was a family business where they were making investments, and one of the investments was a golf course. a golf course was not in the same area in those two businesses then had to be aggregated. >> mr. chairman, don't we need to have the clerk your? >> are we missing someone? uh-oh. thank you, ms. velazquez. i guess we will pause momentarily. oh, okay. we can continue. >> still my time? thank you.

mr. winstanley, do you have a tax specialist on your staff? >> no. not on our staff. >> so who would you consult for guidance on the business aggregation rules? >> we would hire outside counsel for that. we have attempted to read them ourselves that we will have to hire somebody outside. >> and how much is it to hire somebody? >> it arranges but it is expensive. >> i mean, a lawyer by the hour, right? >> right. >> so it's pretty costly? $1000? 2000 or? >> i would imagine what the nature of our businesses it would be significantly more than that spent are you talking 5000, 10,000? >> may be more. >> more than that? well, ms. bogardus -- did i pronounce it right? >> yes, sir. >> thank you.

most webinars or powerpoint presentation on health care law for small business did not include materials on the business aggregation rules. does your company -- does your company? >> we've addressed the issue. we consistently refer -- we are an entrance consulting and brokerage. we consistently refer our clients to the tax and legal advisors because it is so complicated. they will have a better understanding of any corporation, any business arrangements that they created. it also requires in many cases an analysis of options, family trust, documents that were great for purposes other than addressing business aggregation. so they can get extremely detailed. >> how do small businesses know about this aggregation rules? >> you know, quite frankly their advisor if you're working with

an advisor who mentions it to them. so if they have -- >> they advised them -- more than $10,000? >> if they have currently go to hell so come if they are working with a consultant or a brokerage firm that raises the issue to the but if they read about on their own. i know there's information posted on the irs website at the. >> forgive me, are you an attorney? >> yes, sir. >> now, the way i understand the way attorneys charge is a charge by the hour and that includes research, correct? >> yes, sir. >> if i had my attorney -- i want to know about health care law, he would have to read thousands of pages of regulation, and he would be charging me by the hour to do that? >> it would not necessarily require the attorney to read the entire healthy format, but it would require analysis and quite frankly experience with the control group rule, which are very specific, very detailed. and that is a very specialized

area of the law. >> so if my attorney, my normal this is the turning is unduly with that, have to go find another attorney and he's going to charge me -- holy cow. thank you. i see my time has pretty much run out. i yield back my time. thank you, mr. chairman. >> at this point we will yield five minutes to representative barbara. >> thank you, mr. chairman and ranking member velazquez for having this hearing. i appreciate the witness' testimony. the individual are affected are trying to help others were affected by the law. my wife and i ran a small business and opportunity for 22 years we know all of it about what it takes to meet payrolls, keep customers coming back and deal with regulations and taxation issues. so we are very sympathetic to small businesses on a number of levels. we also know that the businesses have to stay profitable and have defined way to go. all of these issues are

important to me that's what i wanted to be a member of this committee so i could see along with my colleagues what we can do to help small businesses be more successful. since i've been there last year, in june, i've been trying to part with people on both sides of the aisle to find reasonable fixes for the affordable care act but i think there are many benefits. i realize -- now we're into the larger implementation for small businesses and individuals. the benefits are real, but the issues are real as well. and i think with any major piece of legislation, over the decades we've had to make amendments and revisions to a bill of that size and magnitude. so i'm clearly interested in learning more about that from you. clearly, as a look at this and effort your testimony and when i listen to people back home, small business owners, i'm reminded that there are three cds that they often talk about.

-- three c's. my job as a member of congress i believe that all of our jobs is to get through all of that and help people be successful and understand the law. i have the same question for each of the witnesses. if you could make one change, or if you could ask one question to be resolved by the agencies that are responsible for the affordable care act, what would your top priority be? i think we need to have some instruction or ideas from witnesses about what we can do. icollege, ms. hahn, was asking what we can do to make things better. not just talking about back and forth, arguing the let's talk about what we can do to fix things. what would those things be from each of you, if you could? >> and i'll go first. i would position the aggregation rule to fulfill the scope that

it was originally designed to fulfill, which was promoting the growth of business. i would treat the industries separately within the context of what the industry is and deal with the workforce is within the context of what they are to position the law to be viable for all industries. >> ms. baker? >> hard to choose, imagine. >> it is, it is. i would definitely support looking at it in industry by industry, looking at it by control, true control, not just ownership or indirect attribute ownership, yeah, someone who's actually making day-to-day decisions. and i do think that the 50 employees is too small. to small. >> ms. bogardus? >> with respect to the rule that impacts small businesses i would suggest taking a second look at

whether rules are with respect to the insurance carriers. because there is not the same level of compliance required of them that would support the employer mandate. and i think some of those gaps in the law would make it difficult if not impossible for businesses to actually get the coverage which specifically need to be addressed but if i can go off topic of small businesses, i would say they would be revisiting the definition of minimum essential coverage. and the plans that will be offered, and i'm sure that some of you write about them in "the wall street journal," the skinny plans, it was an article about six or a month ago. they will not be sufficient coverage but they will satisfy the employer mandate. and i think when individuals realize that they have coverage, that is not sufficient but it is what the law required employers to purchase and provide. there will be significant

backlash, like none of the backlash we've seen so far to date. >> i take the same approach. we're looking at the insurance product. i think the real issue with health care in this country is that the quality of care is not what it needs to be. the ac didn't really focus on quality except in a very small segment with some research so there's a lot more that needs to be done there. and again, i think the required entrance, the types of insurance doesn't make it very easy for people to comply with the rule. >> thank you for your testimony. i yield back. >> thank you but at this point i think mr. bento bolio wiretap if you add on questions. >> thank you, mr. chairman. i apologize for sliding in late and i thank the witnesses for joining us today.

but a couple of questions or comments at the beginning. i think it was ms. walker and others have mentioned that the changes you are looking for we take a legislative change in order to make that happen. and i appreciate that perspective. but what we have seen with affordable care act, it's not necessary to make the changes from this administration. we've had 10 executive actions by which, the poor mandates, you've got another year. and i don't know, ms. baker, i do want people to go to. i don't know as a consultant, makes the job tough if you don't know what the rules are. what they tell you the rules and they say they might delight for another year. i know that's happened in other arenas but we have 10 different areas of the affordable care mandates which is the law of the land where the administration has but executive actions had we're not going to make employers do the reporting requirement. how do you handle that? how do you answer that question when the iris hasn't finalized rules on this? and they could change the rules.

i'll give you one example. i had a business in salina kansas. they were noted in the local paper on july 1 a major changes. that was the renewal period and they did everything they had to do. what a mistake. on july 2 the president said just kidding, we're going to suspend that for another year, kelly the mandate and those kind of things. was the educated folks who must be calling in? what does the one year delay mean? >> it does make it very difficult especially for a small firm like by because we have such limited research. you take the initiative to communicate everything and then all of a sudden it changes. and so you reach out and have to re- communicate. soviet out of time and expense associated with that is great. >> of the responses from the panel? >> sure. it consumes a phenomenal amount of energy. if not used on something else

constructive. fortunate for the restaurant side of our business we are looking at it saying this just isn't sustainable what our current business model. cell phones -- something is got to be done before the scheduled a so we can have some level of comfort that something will happen. hopefully that's not a pipe dream. >> well, and i have yet to see anything from the windows it would make any changes to legislatively to this act. there have been suggestions, things we could fix. we've heard them multiple times in this committee. we mentioned the sba. no interest in changing one letter of the law unless it's by executive action. that is certainly an unacceptable thing to me. one thing i would ask ms. walker on, as far as the trend of basically a part-time economy, that the new hires according to the department of labor. i did note they were that bad. in this economy four out of five

new jobs. was that the figurehead are created are part-time? >> for everyone full-time job is created is for part-time jobs created. >> okay. we are which the hours that's not quite 41. four out of i -- >> the things that -- that's surprising in and of itself to me, but the trend. and i'm not sure whether it was 2010 or 20 to over the years were, but the trend flipped. to you to be six full-time to one part-time. versus one to four. >> that issued a devastating 50. it's not devastating for us in this room. but the folks out there looking for a job, particularly young people who have been the most devastated india's lack of long-term economic recovery. can you describe a little more what happened and basically part-time economy where you're trying to work around trying to avoid these mandates. i mean, people say what you

provide health insurance for some work 20 hours a week? there are reasons. it's costly. and to try to make those demands and changing and uncertain environment we've got to look inside you can't work this much this weekend. the reality is it's not just figures -- i've heard story after story of small business owners saying constant, i didn't have anybody this week. i'm not going to have anybody mixture because in words about the threshold. i don't know what the rules are going to be. i'm not going to take that risk. and these are successful businessmen and women to the message and is that we will let you know next year. it doesn't work that way. any further comments for new? i know i'm about out of time on the that's the frustration i hear. >> i would just add, thank you. i would just add that it's an issue that's crying out for leadership. and leadership in terms of what you are doing here today, and that is seeking of the truth,

what are the facts. and then coming, at lease some sort of agreement on what you can agree on. the american people, small business owners, large business owners, they want to see some sort of a solution to these problems, other than the issues being raised and the lack of a solution being acceptable are considered inevitable. and we need somebody -- and a group of people perhaps to step up and say, something has got to change. because we can't sit back and watch the train to down the track with the bolts flying off. because we know what's going to happen. this is our country, our economy, our fellow citizens, the children, the young people are trying to get jobs, people are trying to grow a business, business owners are trying to do planning who are putting off expansion, putting off building, putting off all kinds of things that could create and generate other jobs, not just within a business. construction work and other

things. so it's crying out for leadership. i would say this is a very -- i would continue down the path. >> i yield back. >> thank you, ms. bogardus. that was great actually but at this point i would like to yield five minutes to mr. payne. >> thank you, mr. chairman. spent mr. payne, would you yield for one second? >> yes. >> okay. i just -- if you -- if not -- >> you're the ranking member. please spend go ahead of them. your five mister i will come back. i didn't want to lose the train. ms. walker, you mentioned, it struck me, that number, that one out of five jobs are part-time jobs? what was the number? [inaudible] >> everyone full-time job created, there are four full-time jobs created. >> we have been hearing mentioned before and the expert

witness on the center for economic and policy research, and he said the vast majority of people who work part time do so voluntarily. in many cases, they have family obligations that make our time employment desirable and even with the current weak labor market. more than two-thirds of the people who work part-time report that they do so voluntarily. thank you for yielding. >> thank you. well, you know, just an observation. you know, the affordable care act is the law, very new in its infancy. and naturally theirs going to be issues around the implementation. we know the problems we've had to this point, but then the of the act i think will revolutionize health care in this nation. if we look back at other large

programs that have been implemented over the course of time, one being social security, probably the easiest one to mention, when it was implemented it was going to destroy this nation. and we are going to socialism, and how could we do this? it was going to ruin the nation. and i think most americans now think that social security is part of the fabric of this country. and so i see the affordable care act having the same type of life in this nation. you know, when they started social security, they used your name as your identifier. well, guess what? they had to tweak the system because there were a lot of donald payne's, ms. baker's and

what have you. so they went through social security numbers. so nothing is perfect when it starts. we have to let it evolve into something that's going to work. so i would like to use that example, probably the easiest example to use in terms of rough starts for large programs that are successful over the course of time. and, ms. baker, in your testimony you state that this law lease small business owners to provide health coverage in an industry where there is not the norm. well, let me just say that, you know, i want to say that setting the norm is precisely what the affordable care act is about. over the last decade, health insurance premiums for small firms have increased 113% needing to drop coverage. the affordable care act was enacted to upset the norm and make it easier for small businesses to compete, and offer

quality benefits. the norm prior to the law allowed insurance companies to drop coverage for employers -- for employees when they needed coverage the most. and discriminate against people with preexisting conditions. the law upsets this norm. prior to the affordable care act, it was normal for an average u.s. family and their employer to pay an additional thousand dollars for uninsured people to cover that cost. the affordable care act aims to upset this norm by bringing the uninsured into the system, driving overall costs down. now, there are issues with the law that needs to be tweaked, but the bones and substance of the law are good and they're here to stay. further, 96% just businesses have fewer than 50 employees. and according to the last sentence, less than 1% of businesses have between 45-49

employees, placing them at risk of falling into the abyss of the employer mandate. again, that is less than 1%. now, i'm interested in addressing our concerns about the affordable care act, and you stated such as the compliance and the burden on small businesses. however, i really find it nonconstructive to continue to play on the fear of the american people, rather than work on ways to make this law better and see if implement it successfully. so, you know, over the course of the last two days, i've heard the president speaking before groups and saying, if you have ideas, and i believe he is reaching out to our colleagues on the other side, if you have ideas that will strengthen the law, then let's discuss it. but to continue to try to pare it down and sabotage and not even allow it to go through its natural course is is

counterproductive. .. counterproductive. so, you know, in terms of solutions -- and i'm very open to the criticism and the potential of making it stronger. so i'm glad to hear your testimony. mr. winstanley, you mention ed - >> yes, sir. >> you mentioned the e-flex coalition that advocates for greater flexibility and options within the law. i understand that the restaurant industry has a unique makeup. what proposal does the coalition have to provide flexibility while upholding the law's goal of expanding insurance coverage i don't -- where do you see